The Reserve Bank of India (RBI) has once again decided to maintain its repo rate at 6.5%, marking the fifth consecutive period without change, Governor Shaktikanta Das announced on Friday. This decision, reached unanimously by the RBI’s Monetary Policy Committee (MPC), reflects a continued effort to balance inflation control with economic growth.Das explained that the MPC, with five of its six members in agreement, remains focused on “withdrawal of accommodation.” This approach aims to gradually align inflation to the target rate of 4%, while still fostering economic expansion. The current repo rate, the rate at which the RBI lends to commercial banks, has been stable since February’s increase, a move that ended a series of hikes initiated in May 2022 following the Russia-Ukraine conflict and its impact on global supply chains.In terms of economic projections, Das provided an optimistic outlook for India’s real GDP growth. The forecast for the current fiscal year 2023-24 is pegged at 7%, with Q3 at 6.5% and Q4 at 6%. Real GDP growth for Q1 of 2024-25 is projected at 6.7%, for Q2 at 6.5% and for Q3 at 6.4%. The risks are evenly balanced.
On the inflation front, the RBI has retained its previous forecasts for the next few quarters. Inflation rates are expected to be 5.6% for October-December 2023, 5.2% for January-March 2024, and April-June 2024, followed by a decrease to 4.0% in July-September 2024, and then a slight rise to 4.7% in October-December 2024. These figures suggest a gradual alignment towards the targeted inflation rate.
